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Table of Contents1. Introduction..................................................................................4
2. The Collapse of US Financial System and its Impact on WorldEconomy...........................................................................................5
2.1 Global Economic Trend......................................................................6
2.1.1 High commodity prices............................................................................7
2.1.2 Trade........................................................................................................7
2.1.3 Inflation....................................................................................................7
2.1.4 Global stock markets...............................................................................8
2.2 Crisis in the US Economy...................................................................8
2.2.1 Possible recession....................................................................................8
2.2.2 Liquidity crisis in U.S..............................................................................9
2.2.3 Developing global financial crisis...........................................................9
2.2.4 Impact of the Financial Crisis................................................................10
2.2.4.2 Indirect economic effects....................................................................11
2.3 Crisis in Europe................................................................................12
2.4 Crisis in other parts of the world.......................................................13
2.5 The financial crisis and the developing world...................................14
2.6 World Financial Crisis and Bangladesh............................................14
2.6.1 Impact on Stock Market.........................................................................15
2.6.3 Impact on the Export-oriented Sector....................................................15
2.6.4 Impact on Real Estate Sector.................................................................16
2.6.5 Impact in Rural Bangladesh...................................................................17
3. Will the crisis lead to another Great Depression?.....................18
4. Global outlook and suggested policy measures........................19
4.1 Global Outlook.................................................................................19
4.2 Foreign Policy Implications of the Global Economic Crisis............24
5. Approaches to Crisis Analysis: The Causes of the Crisis.........26
5.1 Group of 20 Interpretation................................................................26
5.2 Personifying the Responsibility.........................................................27
5.3 Unregulated Practice of Neo-liberal Ideology...................................27
5.4 Flawed institutions and practices of often referred New FinancialArchitecture............................................................................................27
5.5 Deregulation and Risk Shifting by Banks to Investment Banks.........28
5.6 Problematic Financial System failing to manage Risk and allocateCapital....................................................................................................29
5.7 Business Cycle Approach to Financial Crisis Analysis.....................30
5.7.1 Pro-cyclicality of financial institutions..................................................30
5.7.2 Need for a Counter-cyclical Banking System.......................................33
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The article covers development upto February 2009 as regards worldwide impact of the financial crisis, policy responses at different levels and available interpretations of the causes of the crisis and the nature of the key changes required in the functioning of the banking and financial institutions and their management internationally.